The Value Proposition of Hotels
Hotels and inns have always been sort of a special place that people associate with going on vacation, business trips, or long weekends somewhere far from home. We can either choose a hotel on a budget (often associated with mouldy bathrooms and dirty sheets), or we can treat ourselves with a room at a more upscale hotel, but that will cost well over $200 a night. Not everybody has that much extra money, so people came to expect really good amenities for that price. What type of hotel we choose really depends on our income, standards, and how much time we want to spend in the room besides going there to sleep.
Some of the amenities offered by fancier hotels include free Wi-Fi, free parking, pools and spa, free continental breakfast, towels and robes, fancy toiletries, hair dryer, iron, flat screen TV, room service, laundry service, 24hr reception, flexible checkout, and so on (Olmstead 2020). Meanwhile cheap motels can cost as little as $30 a night, they offer a bed and a shower, and that’s about it. Which one a traveller chooses is really up to the type of person, the type of trip, and the available budget.
The boomer generation loves going to hotels. They are more likely to be loyal to one hotel or hotel chain, and 2/3 of them are rewards members (The Economist 2016). The same statistic is 56% for Generation Xers, while only 39% of Millennials are part of a hotel membership. Why the drop in loyalty? Well, experts say it is because people became accustomed to the amenities offered, and they take those for granted. They are not impressed by what is offered for free, and need something more in order to choose the same place next time (The Economist 2016).
I personally think that younger generations place more emphasis, or find more value in experiencing adventures when on vacation. I’m part of the millennial generation and I am most certainly spending more money on experiences than on a room to sleep in. Moreover, hotel rooms tend to be so similar, most of them have that typical “hotel room” ambiance, with a bed, a table and a TV in front of the bed, light coloured walls, flower paintings, and some cheesy dark curtains that match the bedding. We want something more exciting, something different. What is different? Airbnb.
Airbnb is a fairly new thing. It is a platform where people offer their own apartment (or rooms within an apartment) for a few nights to travellers (Folger 2020). I have spent my fair share in Airbnb’s around the world, and I distinctly remember all of them. When I try to think of the interior of the hotel rooms I have slept in, I can only remember a general “hotel room” idea, but not the actual rooms, because they were so similar. What makes Airbnb apartments different is that people can get the feel of how people in that area actually live. The décor, the books on the bookshelf, the neighbours, the area, and the whole experience gives a feeling of belonging there. It is an experience that hotels are not capable of offering, and they can’t even match it. Not even with free continental breakfast.
Another strong point of an Airbnb apartment is the kitchen, where travellers are able to cook their own meals, thus enjoying a home cooked meal instead of stale cereal and bad coffee (if they opt for a free breakfast), and save money instead of spending on an expensive proper breakfast (if they choose to eat out). Of course, Airbnb apartments offer nearly every other amenity a hotel would, including free Wi-Fi, towels and sheets, toiletries, information on sightseeing and entertainment around, and so on, but with the extra element of exclusivity and having your own apartment in an area of the city that you wanted to be in. And most importantly, it is most often cheaper than a hotel room in the same location (Folger 2020).
So, if you stop and think about it, the difference between the two is something like shopping at WalMart versus shopping at a local mom and pop shop of organic produce. WalMart has the convenience of having everything available, and having well thought-out product positioning, marketing, rewards program, standards of operation, trained staff, etc. While the mom and pop shop is an authentic little place offering local, healthy, and often handmade products – with the added element that shopping from them helps local producers, not a national chain. Or like the difference between staying at a fancy resort by the beach versus staying in a village among the locals. The essence behind it is the experience you get: complete relaxation and pampering, or active recreation and discovery of the world. This is why younger generations are moving away from hotels. This is why they see more value in Airbnb.
Nevertheless, hotels and hotel clients will continue existing as long as there is a need for very upscale and elite service, and as long as there is a demand for vacations at all-inclusive resorts.
Olmstead, L. (2020, February 12). 31 Hotel Amenities to Wow Guests and Increase Bookings. https://2ndkitchen.com/hotels/hotel-amenities/
North Americans feel better about hotels than ever. The goodwill is unlikely to last: Future reservations (2016, July 18). The Economist. http://search.proquest.com.libraryresources.columbiasouthern.edu/abicomplete/docview/1805954611/fulltext/D41E89BD9BFF4A3CPQ/8?accountid=33337
Folger, J. (2020, August 28). Airbnb: Advantages and Disadvantages. https://www.investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp